RR:CTF:ER-H040968 PTM
DRA-2-02.
Port Director
US Customs & Border Protection
2350 North Sam Houston Parkway East
Houston, TX 77032
Attn: Drawback Office (Mr. Fletcher Benton)
Re: Internal advice drawback claim RN1-00004720
Dear Madam / Sir:
This letter is in reply to your correspondence dated September 30, 2008, in which your office made a request for internal advice as to the processing of drawback claims.
FACTS:
The Lubrizol Corporation submitted a claim for petroleum substitution drawback on CBP Form (“CF”) 7551 under 19 U.S.C. §1313 (p)(2)(A)(iii). Section II of the CF 7551, which requires a claimant to identify the imported merchandise on which the claim for drawback is to be based, references attachment 1. Attachment 1 to the drawback claim lists 10 entries with import dates between 2/1/2008 and 2/21/08. The 10 entries cover 532,304 kilograms of merchandise classified in subheading 3811.21.00, HTSUS. Section IV of the CF 7551, which requires the claimant to identify the exported merchandise, references attachment 2. Attachment 2 to the claim, as amended, lists 461 export shipments of merchandise made during the period from 2/12/08 to 3/21/08 and said to cover 3,066,763 kilograms of merchandise classified in subheading 3811.21.00, HTSUS. The amount exported greatly exceeds the amount designated as eligible for drawback.
Item 20 of the instructions for section II of the CF 7551 instructs the claimant to record the import entry numbers in chronological order. Item 39 of the instructions for section IV of the CF 7551 requires the claimant to record the date in chronological order of exported merchandise. Those instructions are available at www.cbp.gov.
ISSUES:
Whether it is appropriate to require the claimant to restructure the claim under 19 § CFR 191.53?
If the claim is processed as filed and drawback is paid, is CBP obligated to identify to the claimant any export shipments that were not considered in determining the amount of drawback paid?
LAW AND ANALYSIS:
The statute, 19 USC §1313(p)(2)(A)(iii), authorizes the payment of drawback on exportation of a petroleum product that for the purpose subsection (p) is of the same kind and quality as the qualified article that was imported. In pertinent part, subsection (p)(3)(A)(i)(I) defines a qualified article to be an article described in subheading 3811.21.00, HTSUS, on January 1, 2000. With respect to subsection (p)(2)(E), the statute requires that the export occur within 180 days after the date of entry. Section 191.73 of the CBP regulations provides for export shipments on an export summary listing to be in a chronological sequence. Under 19 CFR §§191.81(e) and (g), CBP determines the amount of drawback due and authorizes payment.
Under 19 CFR §191.53, CBP may require a claimant to restructure a claim for administrative efficiency. Under 19 CFR §191.53, requiring that a claimant restructure a claim is appropriate when it is shown that a claim cannot be processed efficiently without restructuring. A drawback claim under 19 USC §1313(p)(2)(A)(iii) can be processed by a comparison of designated imported merchandise against exported merchandise by tariff subheading at the 8-digit level, amount, and date within a statutory 180-day period. The regulatory factors to be taken into account for restructuring the claim are the number of import and export transactions, the claimed value, the frequency of the claims filed and the products on which the claim is made. The claim is for less than $100,000 and involves 10 import entries for the period February 1-21, 2008 covering 532,304 kg of material said to be classified in subheading 3811.21.00, HTSUS. The claim lists 461 export shipments for the period of February to April, 2008 covering 3,066,763 kg of material said to be classified in subheading 3811.21.00, HTSUS. The file does not present any discussion of the four regulatory factors that would require this particular claim to be restructured in order to be processed efficiently. For the purpose of this decision, it is assumed that the each assertion in the claim as to tariff classification, import and export merchandise quantity, and dates of import and export on the claim is accurate. The list of exported merchandise greatly exceeds the amount of imported merchandise on which the claim is based. However, there is no statutory or regulatory requirement for CBP to review any export shipment that is in excess of the amount needed to satisfy the applicable statute and regulations.
The amount of drawback on this claim can be determined by comparing the amount of designated merchandise covered by the first listed import entry with the amount of merchandise covered by each listed export shipment, beginning with the first listed export shipment, then proceeding to each succeeding export shipment until the amount of the imported merchandise that is designated is matched by the amount of merchandise that is exported. Substitution is determined on the eight-digit tariff classification. In this case, the first import entry covers 20,180 kilograms of merchandise classified in subheading 3811.21.00, HTSUS. The entry date for that entry is February 1, 2008. The first nine export shipments cover 19,108 kilograms of merchandise classified in subheading 3811.21.00, HTSUS. Thus, those shipments, plus 1072 kilograms from the tenth listed export shipment, would satisfy the statutory requirements for a determination of drawback eligibility. On that basis, to the extent that the amount of drawback claimed is determined to have satisfied the statute, the amount of drawback due can be paid. The role of CBP with respect to processing a claim is set forth in 19 CFR §§191.81(e) and (g). The drawback office is to determine the amount of drawback due on the basis of the complete claim and to authorize or deny payment.
The claim form instructions require the claimant to list both the imported merchandise and exported merchandise in chronological order. The claimant failed to follow those instructions. The claimant failed to follow the instructions for the CF 7551 and the provisions of 19 CFR §191.73, by not listing the export shipments in chronological order. Shipments that were made on February 8, 2008, were listed as the tenth, twelfth, thirteenth, and thirty-eighth exports and similar out-of –sequence discrepancies are present throughout the export listing which could render a particular export to be ineligible under the statute. Consequently, penalty action under 19 USC §1593a for failure to exercise reasonable care in the preparation of the claim form should be considered. In addition, the claimant’s listing of exported merchandise in excess of the amount of designated merchandise creates the potential for the claimant to violate 19 USC §1313(v) on future claims. A claimant who follows the form instructions and 19 CFR §191.73 and lists only the amount of merchandise in each export shipment in proper sequence that is asserted to satisfy the amount claimed against the designated merchandise has the information it needs to avoid violating 19 USC §1313(v) on a subsequent drawback claim. There is no CBP obligation to inform a claimant as to the basis for payment when CBP pays the amount claimed. Nowhere in the statute or in a regulation is there a requirement to inform a claimant about data not taken into account unless a claim is denied in whole or part.
The reliance on an information letter (H014851) is misplaced. First, the claimant misconstrues the letter as a ruling under 19 CFR §177.1(d)(1), when the letter clearly states that it is an information letter as defined by 19 CFR §177.1(d)(2). Second, in pertinent part, the letter asked whether items of merchandise imported under different import entries could be listed on different drawback manufacturing drawback claims without violating 19 USC §1313(v). The letter simply cited the statutory language that permitted claims covering components or ingredients of merchandise to be eligible for manufacturing drawback by making an appropriate credit and deduction in computing the amount claimed. The application of that letter to the present claim is not clear. The present claim does not purport to be made pursuant to the manufacturing drawback laws as it does not list any manufacturing drawback ruling. No component or ingredient used to make the export article is identified. Instead, the imported merchandise on which the claim is made is stated to be classified in the same 8-digit tariff subheading as the merchandise being exported. There is no attempt by the claimant to identify the appropriate credit or deduction applicable to the merchandise.
HOLDING
The conditions to support a demand to restructure under 19 CFR §191.53 have not been met.
CBP is not obligated to inform a claimant with respect to data that was not considered in the determination to authorize payment when a drawback claim is paid as filed.
No later than 60 days from the date of this letter, the Office of International Trade, Regulations and Rulings, will make this decision available to CBP personnel, and to the public on the CBP homepage on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division